The last Federal Open Market Committee (FOMC) meeting of 2024 concluded on Wednesday. At the meeting, a further interest rate cut of 0.25% was agreed upon, as expected. During the customary press conference afterwards, Fed Chairman Jerome Powell stated that the law does not allow the central bank to own Bitcoin.
When asked by one of the reporters about the incorporation of BTC into the US strategic reserves, the official was reluctant. This latter fact makes it clear that 2025 could be marked by a power struggle in the US politics. For years, the differences between Jerome Powell and Donald Trump have been evident.
During his campaign, the Republican tycoon promised to add Bitcoin to the US reserves. Recently, during an interview on CNBC, he confirmed his interest in adopting such a measure. So far, it is not clear whether the purchase of BTC by the government will be done through an act of Congress or through an executive order.
The truth of the matter is that Powell's statements suggest there will be tensions on this issue. " We are not allowed to own bitcoins. The Federal Reserve Act says what we can own and we are not seeking a change in the law ," Powell said , clearly showing signs of discomfort.
Can Trump Force the Fed to Adopt Bitcoin?
It is important to note that the laws restricting the Fed from holding Bitcoin are not entirely set in stone. Simply put, Congress or an executive order could force the central bank to adopt this or other assets. In both cases, both the Fed and the Treasury Department would have to abide by those higher mandates.
However, the heads of these agencies could pose obstacles, as Powell himself hinted when he said that they were “not looking for a change in law .” However, the official conceded that in the end everything is in the hands of Congress: “ These are the kinds of things that Congress should consider. But we are not looking for a change in law at the Federal Reserve .”
Recently, the Treasury Department published a report on Bitcoin, which it compared to gold in digital form. This means that the Treasury seems less willing to confront the policies of the incoming Republican administration.
In any case, an unenforced executive order or Congressional act would create a situation of political instability provoked by the Fed. Consequently, Powell's hostility could jeopardize his continued tenure at the helm of the Federal Reserve.
Powell's remarks about the Fed's reluctance sparked a negative reaction in the price of Bitcoin. At the time of writing, the currency lost 3% in one hour and threatened to fall below $100K.